After more than four decades in business, there are certain things that Stan Richards, the 78-year-old founder of The Richards Group, believes to be true. Employees, for one, must arrive by 8:30 a.m. (not 8:30-ish-they have to punch in). Time spent on the job must be accounted for in 15-minute increments, daily. Fail to do so, and you'll be docked $8.63. Arrive promptly to meetings or be shut out of them. Close of business is 6 p.m. Finish your work and go home.

Given all that, you could be forgiven for concluding that Richards runs a widgetmaker or a call center or a print shop—the kind of operation in which work needs to be highly regimented to get done efficiently. In fact, The Richards Group is an advertising agency.

And not just any advertising agency. Founded in 1976, The Richards Group is the largest independently owned ad shop in the country, with billings of $1.28 billion, revenue of $170 million, and more than 650 employees. Its portfolio is packed with some of the most memorable campaigns of the past 30 years. Chick-fil-A's famous cows, those alluring Corona beer ads with couples lounging on the beach, Motel 6's "We'll Leave the Light on for You"… all were born at Richards's Dallas headquarters. Most recently, and infamously, the agency went perhaps a bit too far, sparking a nationwide controversy with a set of startlingly direct ads for Summer's Eve cleansing wash. The spots declared "Hail to the V"; some cheekily used hand puppets to play the roles of multiracial talking vaginas.

Highly structured and rules-bound companies, of course, are not supposed to produce work like this. "Creative" industries such as advertising, software design, and the like are supposed to require a loose, anything-goes culture, in which workers are free to come, go, and dress as they please. It's a world of verdant campuses, foosball tables, and caffeine-fueled all nighters. Introduce things such as start times, end times, and time sheets—rules—and watch your creatives run for the exits. Richards, obviously, feels differently. "We need to be disciplined," he explains. "We are not gallery painters who paint when the feeling moves us." And Richards has made it work. The 29 creative group heads at Richards's shop have an average tenure of 17 years. "The genius of the place is completely counterintuitive," says David Fowler, who wrote the landmark Motel 6 spots back in 1986 and today is the executive creative director at Ogilvy & Mather in New York City. "Somehow, Stan made you feel like you were only limited by the size of your ideas."

The way Richards sees it, his unusually regimented approach, honed over the course of decades, will outlast shifting tastes, disruptive technologies, and—with the help of a decidedly unconventional succession plan of his own devise -- his own mortality. Today, as he encounters obstacles he never could have predicted (such as bloggers enraged by his agency's take on feminine hygiene), he knows a good agency, like a good ad, binds commerce to art. He's betting his legacy that his rules will remain the linchpin.

On a recent summer afternoon in Dallas, Richards can be found in his natural habitat: a creative-planning meeting. This particular gathering concerns a new client, the Dallas-based electricity reseller TXU Energy. The brand, spun off from Texas Power and Light when the state privatized its utility industry in 2002, is in search of a new corporate identity. Too many Texans consider it a faceless monolith; the corporation's private equity owners asked Richards to help make it more personable and endearing. Do for us, they asked, what the cartoon cows have done for Chick-fil-A.

As Richards sips from a travel mug of tea, 11 copywriters and art directors gesticulate, speak in funny voices, and talk along with videos in an attempt to pitch scenarios as diverse as a noirish detective on the lookout for low bills to a kangaroo bouncing on a pogo stick bouncing on a trampoline—anything that might make TXU Energy seem cute and likable. But in practical terms, what they are trying to do is get a reaction from their boss. That is easier said than done. Occasionally, Richards smiles or asks a question. But for the most part, he stares silently, his eyes narrowing as though fatigued. Each pitch is met by the same, inscrutable utterance: "OK."

One pair of creatives, Lynn Fredericksen and Kevin Paetzel, pitch the tag line "Our Energy, Your Life" and propose TV commercials featuring YouTube—inspired videos showing all the nutty things people choose to do with electricity—such as blow-drying a parrot. Richards smiles slightly at the parrot. "Read the offer again," he says. Fredericksen does as he's asked. Richards breathes in deeply, while others in the room shuffle papers. "OK." The pair toss out another idea, "Wedgie," a reference to the way rival energy companies trick their customers into higher bills. "OK," Richards says. "Thanks."

David Eastman, a creative group head, is up next. His idea: a robot mascot, "Tex-U," a high-tech, well-muscled superhero designed to personify the brand. Eastman acts out several scripts, alternating between human voices and Tex-U's robot voice, which includes a hysterical-sounding electronic giggle. Richards again responds with a slight smile.

A dozen or so pitches later, Richards concludes the 90-minute session. "My only comment is that we have figured out 20 different ways to complicate the offer to the point where it's almost impossible to figure it out," he says. "But there were things I thought worked. They were…"

The room is silent. "Lynn and Kevin, your spot called Wedgie. I thought there were a lot of things wrong with it, but there is potential there if you can figure out specifically how to communicate your point. Eastman, the robot direction works reasonably well. The key is figuring out how to design the robot so that it has the appeal of Wall-E. Currently, it doesn't have that." That's it. Richards makes a point not to comment on work he doesn't like. "I learned long ago it's not worth it to try to fix bad work," he tells me later.

Richards has always run meetings this way. "If you got a 'way to go,' you'd be on Cloud Nine for the rest of the day," says Doug Rucker, who joined the agency in 1987 and served as a creative head until 2001, when he left to start his own shop.

Richards strikes the same quiet demeanor with clients. He's friendly but prefers talking strategy to jokes and backslapping, says Leigh Killeen, who runs advertising at the Florida Department of Citrus, a Richards Group client until 2010. Richards and his team "aren't suits," says Killeen. "These guys and gals are very down to earth, smart people. Good listeners, and good with research."

Richards has been cultivating this singular style for his entire career, but it can be traced back to one man: Hershel Levit, who taught Richards's advertising design class when Richards attended the Pratt Institute in Brooklyn, New York, in the 1950s. In that class, he learned to meticulously craft layouts of type and images. When reviewing his students' work, Levit would line them up and, squinting at their papers, gesture accusatorily at extraneous elements with a thick middle finger. When he encountered work he considered lazy, he would tear it in half in front of the class.

But Levit's unforgiving attitude belied his own boundary-pushing creativity. An acclaimed illustrator, photographer, and designer whose work went on to be displayed in museums and galleries nationwide, Levit would regale his students with tales of composers Igor Stravinsky and Arnold Schoenberg -- whose album covers he had designed. For Richards, it was a powerful lesson. Creativity and drudgery are not mutually exclusive, Richards deduced as he toiled away. Instead, they enable each other. A good idea can come from anywhere. Expressing it in a way that jumps off the page—fresh, elegant, exciting—requires, first and foremost, relentless hard work.

By 22, Richards was making the equivalent of $97,000 in today's dollars as a creative director at a Dallas advertising agency. He sped around town in a flashy white Porsche. But he was unhappy. The agency's account executive nixed anything a client might find unsettling or risky, which felt like everything Richards produced. After a year, Richards quit the agency and set out on his own. He called himself the "poorest Porsche driver in Texas."

Richards didn't remain poor for long. As the oil business boomed throughout the '50s and '60s, he soon found himself freelancing for firms all over town. The heavy workload caught up with him in the form of a particularly massive annual report for an electric utility. With an SEC-enforced deadline looming, one all nighter turned into two all nighters. After 50 hours straight of work, his stomach upset from too much coffee, he threw up. He returned to his desk and got back to work, until he was sick again. The vomiting and working went on for another 13 hours, until he finally finished.

Richards decided he wouldn't do that again. Instead, he began keeping scrupulous time sheets, which were designed to provide the data he needed to project how long similar projects would take, preventing another 63-hour workday. Besides, his wife, Betty, who managed his books, had long bugged him to clock in more diligently, for billing's sake.

By the early '70s, Richards had formed a tight cadre of like-minded designers. In 1976, an executive from Mercantile Bank asked Richards to pitch a campaign. Almost overnight, he went from design shop to full-service advertising agency. Richards hung a shingle for The Richards Group and began hiring like-minded copywriters, media buyers, and account-service people, too. The young staff, impressed by Richards's accomplishments and too green to question him, adopted his zealous and regimented style. They dressed sharply in shirts and ties, arrived bright and early, and filled out their time sheets diligently. And they learned to revere advertising as an art form.

Soon, The Richards Group boasted a roster of impressive clients, including Time Inc., T.G.I. Friday's, and Motel 6. The agency never had to pitch; business came to it. But as the agency grew (and grow it did—sixfold from 1978 to 1987, to $13.4 million in revenue), Richards faced a new obstacle. The larger the agency became, the less control he had—and the less control he had, the greater the chance that the work would suffer.

Richards already insisted on approving all advertising. But his attentions hardly stopped there. Offices, he believed, should be immaculate. Staff members should be at their desks early, before clients need them. They should be dressed to impress, in case that client walked in the door.

With the head count growing, the agency had moved into new offices on multiple floors. Richards fretted that he never knew for sure when people arrived. He did know that some new hires were bending an unspoken shirt-and-tie rule, coming in dressed in ties and jeans or ties and shorts. One flippant art director, Bryan Jessee, sported a tie that looked like a dangling fish. Richards found the garment appalling. He exhorted the staff in memos to take the dress code more seriously.

He felt the same way about the 8:30 start time and the time sheets. In July 1985, a memo announced that anyone filing time sheets late would be fined $8.63 a day, the cost to the agency of tracking down stragglers. Other rules were less operational than aesthetic. The tops of cubicle walls were to be kept clear, so that the stations looked clean and uniform. The blinds were adjusted to uniform angles.

Some people grew frustrated and left. But those who remained continued to perform. And in 1986, a campaign for Motel 6, written by 29-year-old David Fowler and smartly placed on the radio, where highway travelers would hear it, launched The Richards Group onto the national stage. That summer, as the "We'll Leave the Light on for You" campaign blared from car radios nationwide, millions of weary travelers began checking in—and Motel 6's fortunes soared. Five straight years of sales declines turned into higher occupancy levels and record revenue. The ads won radio spot of the year from several industry groups. Richards's peers at larger advertising conglomerates began to take note.

One of those admen was Marvin Sloves, the CEO of the New York City agency Scali, McCabe, Sloves. Known as Super Mensch for his schmoozing skills, Sloves rolled up to The Richards Group's offices in a black limousine. He wanted to acquire the agency and was prepared to offer some $10 million.

Most anyone would have considered Sloves a godsend. By 1987, plunging oil and real estate prices had left the Texas economy in a shambles. A consolidation wave was sweeping the advertising industry, meanwhile, leaving many to wonder whether smaller agencies would survive. But when Richards listened to Sloves, he felt the same heartburn he had experienced when he saw the fish tie. If he ceded control, the agency would be ruined, he sensed. So Richards declined Sloves's offer. His wife was not pleased. But his staff was impressed. "I was proud," says Doug Rucker. "We were the underdog, and Stan believed we could still win."

Over the years, as the agency matured, Richards relaxed some of his rules. The shirt-and-tie mandate ended in the early '90s. Staff members now have the freedom to decorate their cubes as they see fit, and the blinds—at least when I visited—seemed to be set at different angles. Richards no longer insists on OK'ing every piece of work. The time sheets and the mandated start time remain in place, though. There are new rules, too. Richards discourages e-mail, preferring that people speak in person. When they send messages to clients, he requires that the missives be clearly written and carefully proofread. Slipshod work, he believes, makes for a slippery slope.

On the third morning of my visit, Richards shows up to my hotel at 5:45 a.m. dressed in shorts, a tank top, and a black sweatband around his head. Ever since he had his hip replaced in 2008, he has been unable to run every day. Now, he alternates running with grueling spin classes. Today, we're spinning.

Richards climbs on a bike. A minute later, he is joined by The Richards Group's creative group head Tina Johnson, who oversaw the work on the Summer's Eve campaign, and principal David Hall. Halfway through the class, the only other man anywhere near Richards's age quits, his face wracked with pain. Afterward, Richards looks sanguine. "Not a bad workout, heh?" he says.

Richards has never doubted his vigor. But when he hit official retirement age in the late 1990s, something had begun to change in meetings with prospective clients. They were beginning to ask, each in their own diplomatic, awkward way, what would happen to the agency when Richards called it quits—or, well, keeled over.

Richards found it a reasonable enough question. So one afternoon he sat down and drew up a succession plan. It is designed with only one goal in mind: to ensure that The Richards Group persists in the future the way Richards has it set up today. Richards has two sons, one of whom runs his own ad agency in San Francisco. But neither wants to fill his father's shoes. So when Richards dies, sole voting power and management of the company will be awarded to one of four employees who will run the agency autonomously, just as he has. They are two art directors, a copywriter, and a principal—Glenn Dady, Gary Gibson, Mike Malone, and Dick Mitchell—who have worked for him since almost the beginning. Richards will provide no clues as to who will prevail. ("We try not to think about it," says Malone.) At the same time, all the company's equity will be donated to a nonprofit—which he has selected but not yet named—on the condition that the agency never be sold to a holding company or anyone else, ever.

The plan is unusual, if not unprecedented. And it presumes that the nonprofit, which has not been informed it will be the recipient, agrees to such a scheme. (Richards will say only that it is one he has been involved with, which makes MD Anderson Cancer Center, the Salvation Army, and Southwestern Medical the most likely candidates.) Still, both Richards's CFO and his wife have signed off on the idea. And because Richards is the firm's sole owner, it's his call.

Of course, even as he was crafting his succession plan, Richards found the idea of retirement unimaginable. He still believed his biggest accomplishments lay ahead. In 2002, for example, the agency won its biggest account ever, worth $18 million a year, when it signed up Hyundai Motor America and its dealerships.

Richards, however, was no longer a young man. And just as TiVo, social networks, and mobile phones were rocking the foundations of the traditional advertising industry, young boutique agencies with funny names (StrawberryFrog, Mother, Modernista!) were swooping in, pitching clients newfangled ideas and taking projects right out from under the noses of traditional shops. That's exactly what happened with Hyundai.

In 2006, Hyundai appointed a new chief operating officer, Steve Wilhite. Though relations between client and agency remained congenial, Wilhite grew frustrated with The Richards Group's work. He challenged Richards about it. "When you die, would this be the work you'd want to be remembered by?" asked Wilhite. Richards had to admit that it wouldn't.

So when a young, upstart agency called Siltanen & Partners cold-called Wilhite with ideas for Hyundai, Wilhite listened -- and then decided to produce its ideas as national commercials shortly after. The relationship with Richards Group deteriorated quickly after that, and in early 2007, the carmaker announced it would be hiring a new ad agency.

Overnight, revenue at The Richards Group fell 10 percent. But then something interesting happened: Richards's infamous time sheets became an unexpected secret weapon. Thanks to detailed budgeting data, nearly every account, even the tiniest ones, had strong margins. As a result, even though sales took a big hit, the bottom line remained intact.

Meanwhile his staff, by then 630 people strong, continued to pitch new business. And bit by bit, the agency built back its revenue. Heineken handed the agency its Amstel Light account. Then, the group won Orkin, the extermination company. When Advertising Age published its list of agency rankings in 2008, The Richards Group's revenue had edged $2 million ahead of Doner, an agency in Southfield, Michigan. It was now the biggest independent agency in the United States. Richards had never taken a loan or given up one share of equity.

Of course, there have been setbacks. Consider the surprising, lively—and to many, extremely offensive—ads for Summer's Eve earlier this year.

The agency had won the campaign with a slogan dreamed up by Tina Johnson's team: "Hail to the V." The idea, Johnson says, is "that if you love your vagina, your vagina will love you back." From the outset, the creative team planned to take on the taboos and euphemisms that normally surround feminine-hygiene advertising. When Angela Bryant, the head of marketing for Summer's Eve, arrived at The Richards Group to hear the pitch, she walked into the lobby to find all 650 employees assembled along the stairwells surrounding the agency's central atrium and copywriter Matt Bull standing front and center, ready to recite a humorous poem he had written in tribute to the word douche. "We can take this word back, so that it means: one with great freshness," Bull declaimed. "Abraham Lincoln...now, he was a great douche. Mahatma Gandhi? Douche. Stan Richards? Truly, there is a douche among douches." Richards laughed heartily.

As Johnson and her team got to work, Richards took a back seat. At the end of the process, the team presented the client a treatment for the "Hail to the V" commercial. It resembled an old-school Hollywood epic, like The Ten Commandments or Ben-Hur. The campaign also featured a pair of websites on which a cat puppet complains about all the slang words for vagina and argues that the phrase that's vaginal should be a compliment. In another video, the product was touted by a talking hand puppet meant to resemble a vagina.

Bryant loved it. "We wanted to shake things up," she says. In focus groups for the campaign, women responded with both shock and delight. When one group noted that the talking hand puppet was Caucasian, Johnson and her team filmed two more versions aimed at African Americans and Hispanics.

The campaign launched on July 17. "Hail to the V" ran as a trailer before the latest Harry Potter movie in hundreds of movie theaters nationwide; the talking hands ran online. The blogosphere's rage flared almost immediately. Commentators decried the talking hands as insensitive caricatures. "Sorry, but 'Hail to the V' shows that Madison Avenue has not evolved much from its Mad Men roots," wrote one typically scathing blogger. "The Summer's Eve campaign deserves to be labeled with a few choice C-Words: Culturally Clueless Crap." Others decried the multicultural spots as rife with ethnic stereotypes.

A week later, Summer's Eve decided to pull the multicultural talking-hand ads, although it stands by the rest of the campaign. "It did what it set out to achieve," Bryant says. "It had people talking about the brand that had not talked in years." Richards makes no apologies. The campaign did what it was supposed to do—highlight the product's advantages in an attention-getting way. "We told the client at the outset to expect a strong reaction," he says. He says he had never been told about the multicultural spots. But even so, he admits he might not have anticipated any controversy around them. "I hope that I would have caught it, but I don't know for sure," he says.

Almost all of Richards's life revolves around the agency, and he enjoys being the patriarch. The weekend I visited, one of his sons was in town to see his mother. But Richards headed to his vacation home on South Padre Island for a fishing trip with a few members of his staff—which he does most weekends during the summer. In the winter, he brings small groups of employees to his house in Park City, Utah, to ski. The trips are meant to be fun, but of course, there are rules. Everybody gets up at 7 a.m. for Richards's oatmeal. They generally ski as a group (newbies are permitted to take a lesson).

Over the years, those rules have sent plenty of folks running. But for those who manage them, Richards's outsize dedication to his craft makes them worth tolerating. Creative people, in advertising as in other fields, have a primary goal: to make something great. To do that, it helps to have a leader who cares even more deeply about making your work great than you do. And with Richards, that's what you get, says Bryan Jessee, the former art director who showed up for work that day in the 1980s wearing the offending fish tie.

"I hated the rules. I bucked every one of 'em I could," says Jessee. "But it was a great place to go and learn the craft. He has an expectation that everything should be great."

Jessee runs his own agency now. He doesn't mandate dress codes or start times. But his time with The Richards Group has left its mark. Jessee considers himself a perfectionist and encourages similar dedication among his employees. He has also adopted a profit-sharing plan similar to that of his former employer. And it doesn't end there. During our phone call, as he recalls Richards's fixation on things like blinds and cubicles, Jessee stops himself: "I just realized I'm straightening chairs in our conference room as I'm talking to you."

The Outlier

The Richards Group doesn't look much like most ad agencies. Here's what it does differently and why.

Departments

TYPICAL AGENCY: Most agencies are divided into three main groups: the creatives, who design the ads; the planners, who do research to inform clients' marketing strategies; and the account execs, who manage client relationships.

THE RICHARDS GROUP: The Richards Group's employees have similar job functions, but no two employees in the same department are permitted to sit next to each other. When people with different jobs sit side by side, Richards believes, they collaborate more and resent one another less.

Equity

TYPICAL AGENCY: Most privately held shops are set up like law firms, in which senior execs are rewarded with partnerships, allowing them to buy into the company.

THE RICHARDS GROUP: In place of equity, Richards rewards employees with profit-sharing funds—a bonus on top of their usual bonus, usually about 15 percent of annual compensation. Richards retains all equity and sole control.

Hierarchy

TYPICAL AGENCY: Most agencies mimic the chain of command of their corporate clients, in which directors report to vice presidents, who answer to senior vice presidents and executive vice presidents, and so forth.

THE RICHARDS GROUP: Just one layer of managers separates Richards from the rank and file. That means Richards has 44 direct reports—but a much closer vantage point on his agency's day-to-day operations.